Changes to property taxes coming if Labor wins the election

By Janet Spencer

Many  investors are not fully aware of what changes Labor proposes if they win power on the 18^th of May.  You need to know how this will affect your portfolio and

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property buying plans for the future.

Labor believes that investors are taking advantage of tax concessions and are inflating property prices whilst competing with first home buyers. So, they plan to restrict negative gearing to new properties only and increase capital gains tax by reducing the 50% discount to 25.

Labor expect that reducing tax concessions will reduce the demand and stabilise or reduce property prices. However, the increasing disparity between average home price and average weekly earnings means the decrease in property prices will be insignificant for young home buyers.   They also believe this policy will see a boost in housing and will provide new opportunity for young families whilst taking pressure of inner-city markets.

As Buyers Agents, we acknowledge that It is difficult to make homes more affordable for first-home buyers. Previous initiatives were self-defeating, they pushed the price of property up by creating more buyers.

A report commissioned by master builders Australia, prepared by Cadence Economics, has forecast a decline in new home building of between 10,000 and 40,000 dwellings and a loss of 7500 to 32,000 full-time construction jobs if these changes are made to property taxes.

Restricting negative gearing to new properties makes established properties less attractive to some investors.  At Buyer Solutions, we believe that If the negative gearing changes are implemented, they should be done for all properties.

Labor has promised that their capital gains tax increases will affect only assets acquired after 1^st of January, 2020. I expect a flurry of buying in both property and shares, as everybody who can will want to buy before the tax rules change. But it’s a paradox. An asset bought before the change will be worth more than one bought after the change, for tax purposes.  So, whilst buying now for investors, we are very conscious of not overpaying.

Should you want to invest in 2019 in real estate, please get in touch and we can assist you to do so safely and not to overpay.

Buyers Advocate, Buying property, Housing Affordability, Housing Market, Investment property, Real Estate News & Opinion

capital gains tax, election, labor, negative gearing, property market, Real estate